Recent DDoS attacks on a number of major Bitcoin exchanges have caused them to suspend trade. Mt Gox, one of the most significant exchanges, blames hackers trying to create fraudulent transactions for the attack. The value of the cryptocurrency has dropped significantly, from a high of $926 on February 5th to $501.83 as of time of writing. Bitstamp, BTC-e and Mt Gox are all known to have been affected.

Tokyo-based Mt Gox argues that the attackers are trying to create uncertainty, and exploiting that uncertainty to duplicate transactions. By intervening just after a transaction is initiated but before it completes and changing the transaction ID, the hacker can create the illusion that the transaction never completed. The hacker then claims a second payment, alleging that the first one wasn't valid.

"Whoever is doing this is not stealing coins, but is succeeding in preventing some transactions from confirming," says Jinyoung Lee Englund of the Bitcoin Foundation. "It's important to note that DDoS attacks do not affect people's bitcoin wallets or funds."

The value of most other Bitcoin variants has fallen, dragged down by the drop in Bitcoin itself. The one exception so far is Dogecoin, whose value has risen markedly. It's now the third most valuable cryptocurrency, after its value soared 27% in 24 hours.

Meanwhile both Russia and China have started cracking down on Bitcoin. Last week the Central Bank of Russia made it illegal to use Bitcoin, alleging that it could be used for money laundering and criminal activity. Russia's move came after China's largest exchanges started banning Bitcoin sales earlier this year, as the government cracked down on the cryptocurrency. Alibaba Group, China's biggest online marketplace, complied with the government's demands "in the interest of consumer protection," said a spokeswoman.

In both instances it seems likely that, although there are legitimate concerns about criminal activity, the bigger issue is currency control. Though there are benefits - China's investments in Africa have been made much easier with Bitcoin - neither China nor Russia really likes the idea of an electronic currency that avoids both government regulation and monitoring.

"It is proposed to punish (with large fines and imprisonment) all anonymous 'electronic' money transfers through the border," alleged an anonymous Russian Cryptocoins News source. "Since Bitcoin has no borders, it may be the problem." The source argues that Russia's political opposition has been funded via Bitcoin for some time, and this crackdown is an attempt to stifle that opposition, as well as a more general reaction against technology the government doesn't understand.

"To put things in perspective," says Mt Gox as it explains the reasons behind its suspension of trade, "it's important to remember that Bitcoin is a very new technology and still very much in its early stages. What Mt Gox and the Bitcoin community have experienced in the past year has been an incredible and exciting challenge, and there is still much to do to further improve."

Karloff:The value of most other Bitcoin variants has fallen, dragged down by the drop in Bitcoin itself. The one exception so far is Dogecoin, whose value has risen markedly. It's now the third most valuable cryptocurrency, after its value soared 27% in 24 hours.

It's important to note, however, that each Dogecoin is worth virtually nothing, so a 27% increase isn't all that much when you really look at it. Which is part of the driving force behind its success, I suppose. People are far less worried about making transactions in a currency that's not even worth 2 10ths of 1 US cent (at the time of this post), and is used mostly as a joke (for now).

Hmm, methinks the sweatshops in either China or Russia along with the usual bots are behind this attack. Better to just use your existing crypto army on a threat than go out and try to find, fine and arrest anyone still trying to trade in the country with the banned currency.

"It's important to note that DDoS attacks do not affect people's bitcoin wallets or funds."

Ha, that's like saying a major industry stock dive didn't affect the portfolios of investors. This very article just said the price of a bitcoin dropped by 54%. I'd say that dramatically affected anyone with bitcoins.

What I fail to grasp is how a currency not within a given governments control, can be made "illegal". How can they control what any two given people use as trade for a transaction? I might pay someone in favours, beer, a steam game, pounds, dollars or "services rendered" (a favour for a favour). If I agree that something is of value to me and sufficient as payment for whatever I provide in exchange, I can use whatever medium I choose for the transaction.

The only thing a nation's currency is good for, is the knowledge that all shops/businesses within that nation are obliged to accept that currency. There's nothing to stop them accepting others if they choose.

And (not so) suddenly, being independent from the government doesn't seem so appealing when you don't have the security of an entire government. It's almost like there's a reason regular currency has (mostly) worked for hundreds of years.

KingsGambit:What I fail to grasp is how a currency not within a given governments control, can be made "illegal". How can they control what any two given people use as trade for a transaction?

In Russia it qualifies as a Surrogate currency. Which means it is used in place of the countries legally recognized currency. For example, if you used US Dollars in Russia, and they found out about it, you would be arrested and charged. In Russia you cannot legally use anything other than Rubles as currency. If you are found spending dollars in Russia and it's not at a legal exchange usually found at the boarder you're going to be spending some time in jail. Here is a guide that outlines in English Russia's currency standards for business. Anyone who thought Russia wouldn't view BitCoin as Illegal under their current law when they view USD as Illegal shows just how powerful Group Think is in regard to BitCoin.

If a Government wanted to shutdown the entire bitcoin operation it would be a trivial task.

Here is how and why.BitCoin controls the difficulty of creating currency by controlling the length of time it takes to Generate Blocks of data. Because the length of time is limited to generate a block the maximum number of transaction permitted on the network is 7 transactions per second.

So to perform a Resource starvation attack all I need is a few computers that appear to be spread accost the country to mask that it's all the same person doing it. Simple if your a government with deep pockets with access to an ISP with plenty of Fiber loops like Century Link. You could make one computer look like a dozen spread accost the country.

You then just have it send out once a second 0.0000001 BTC to one of 7 accounts. Then those accounts do the exact same things. If they keep this up and keep changing the accounts they send the money to the network is starved of resources.

This kind of attack is impossible to prevent. Even increasing the transaction fees wouldn't stop it because the government just has to know who doesn't have transaction fees and ensure they use those nodes. Since they control the Sending and Receiving of the transaction that's trivial. A real banking system would just put a hold on the accounts doing the transactions, but since it's a distributed peer to peer network everyone has to agree in order to freeze an accounts assets. Even if you think that everyone would agree you couldn't stop the government from creating their own mining rigs that would accept the 0.000001 transactions.

This would stop all transactions until the protocol was rewritten which would just change the maximum number of transactions which the government could just increase to meet that new limit.

The particular attack against MTGOX is different, and involves a well known bug in the BitCoin protocol that the best way I have to describe it is that you write someone a check and they change the check number on the check. Because MTGOX ignored this possibility they think the check they sent didn't clear so they don't remove funds from the account that requested the money. MTGOX then sends the money again effectively double paying the requester until their wallet gets out of sync or until it's empty. The alternative to checking the Check Number is the stupidest thing I've ever heard come out of application programmers mouths. They have to use the Account Number, Amount, and Timestamp to actually verify that they send money. However, those are not Unique and opens up another attack vector utilizing two transactions with the same account, amount, and timestamp. Since the bug in the transaction ID goes back to 2011 and will never be really "fixed" it highlights the general issue with utilizing a Peer to Peer network.

The solution is to have a central authority like a Central Bank, but that was done before and the Government easily shut them down, see eGold, because they can just arrest the Central Authority, and the game is over.

What the fuck are bitcoins actually backed by? Most currencies are backed by countries, I'm still wrapping my head around why Bitcoins are even worth anything at all. Not just another extension of the current dotcom bubble that's going to crash sometime reeeeeeeaaaalll soon.

KingsGambit:What I fail to grasp is how a currency not within a given governments control, can be made "illegal". How can they control what any two given people use as trade for a transaction?

The solution is to have a central authority like a Central Bank, but that was done before and the Government easily shut them down, see eGold, because they can just arrest the Central Authority, and the game is over.

Good post, by the way.

Also, I think the whole idea of the Bitcoin was that there would be no central authority whatsoever. This always seemed like flawed thinking to me, and now I know why.

Vilealbaniandwarf:What the fuck are bitcoins actually backed by? Most currencies are backed by countries, I'm still wrapping my head around why Bitcoins are even worth anything at all. Not just another extension of the current dotcom bubble that's going to crash sometime reeeeeeeaaaalll soon.

Supply and demand. There is maximum of coins that can exist.

And as long as it remains unstable i just cant see bitcoins as currency, but more like a investment.If i received a payment just before the price drop, i probably felt screwed.

My "bullshit" meter has broken the needle with this one. With all the negative publicity virtual currencies have received over the last few months, you don't find it strange that they are now suddenly being hit by ddos attacks that are devaluing the "currency"? Marketing 101; If your product has a perceived negative quality, lower the cost to entice new customers.

Scrumpmonkey:"The one exception so far is Dogecoin, whose value has risen markedly. It's now the third most valuable cryptocurrency."

Ha! And people take this shit as money. If you have never invested in a Cryptocurrency you are a fucking idiot who deserves to lose every cent.

I assume you mean ever. Also, just about everyone I know who has invested into bitcoins have made back twice their investment and are now trading with money completely separate from their original investment. Their original investment is back in their pocket.

Scrumpmonkey:"The one exception so far is Dogecoin, whose value has risen markedly. It's now the third most valuable cryptocurrency."

Ha! And people take this shit as money. If you have never invested in a Cryptocurrency you are a fucking idiot who deserves to lose every cent.

I assume you mean ever. Also, just about everyone I know who has invested into bitcoins have made back twice their investment and are now trading with money completely separate from their original investment. Their original investment is back in their pocket.

Bitcoin isn't really a currency, it's a speculative commodity. Just because a few people have made money on it does not prevent it from being a terrible idea. "Hey Guys! Lets speculate on this unregulated commodity! The price can't possibly go down i doubled my money last time i- aaaand it's all gone" Right now there is Bitcoin fever, I'm sure all those dutch people in the 17th century investing in tulips thought they were pretty smart too, I'm sure a few of them made a bit of money.

It's like investing on any highly speculative commodities on the stock market it's self; these things can be extremely volatile because their value is not moored to reality it is simply imaginary. People know these are high risk ventures and act accordingly. This is ignoring all the massive structural vulnerabilities with cryptocurrencies that make then arguably more vulnerable than a traditional commodity.

Bitcoin is a bubble. When it bursts a lot of people are going to be very out of pocket.

Scrumpmonkey:"The one exception so far is Dogecoin, whose value has risen markedly. It's now the third most valuable cryptocurrency."

Ha! And people take this shit as money. If you have never invested in a Cryptocurrency you are a fucking idiot who deserves to lose every cent.

I assume you mean ever. Also, just about everyone I know who has invested into bitcoins have made back twice their investment and are now trading with money completely separate from their original investment. Their original investment is back in their pocket.

Bitcoin isn't really a currency, it's a speculative commodity. Just because a few people have made money on it does not prevent it from being a terrible idea. "Hey Guys! Lets speculate on this unregulated commodity! The price can't possibly go down i doubled my money last time i- aaaand it's all gone" Right now there is Bitcoin fever, I'm sure all those dutch people in the 17th century investing in tulips thought they were pretty smart too, I'm sure a few of them made a bit of money.

It's like investing on any highly speculative commodities on the stock market it's self; these things can be extremely volatile because their value is not moored to reality it is simply imaginary. People know these are high risk ventures and act accordingly. This is ignoring all the massive structural vulnerabilities with cryptocurrencies that make then arguably more vulnerable than a traditional commodity.

Bitcoin is a bubble. When it bursts a lot of people are going to be very out of pocket.

However, the rest of us are profiting off this bubble and are at no risk because we've already made our money off of suckers. People who combine their normal finances with bitcoin finances are dumb and deserve every penny they lose.

However, the rest of us are profiting off this bubble and are at no risk because we've already made our money off of suckers. People who combine their normal finances with bitcoin finances are dumb and deserve every penny they lose.

You see that's the problem. Bitcoin is supposed to be a currency. It's supposed to be useable as a means of storing finance.

All of those who invested in bitcoin, even at it's early stages, could have just as easily lost all that money. "No risk" is the exact opposite of the situation, it was high risk. Profit made was done so out of luck. That is the nature of risk. People make money from risky investments, but those people don't see the 10 other people who lost out by either coming in at the wrong time or hanging on too long.

It's essentially like gambling, by buying a bitcoin you are 'betting' they are going to go up. But the factors that control that are completely out of your control. Since the bitcoin has no underpinning, central reserve, regulation or monitory systems in palace there is really no way to predict it's trajectory. Nevermind that frequent attacks, selfish mining techniques and other vulnerabilities means things are stacked against you.

Some people will put their money on No. 7 black and win. It's still a stupid idea. But all of this does give me the urge to go to vegas. More fun than bitcoins. Probably a better long term investment plan too.

However, the rest of us are profiting off this bubble and are at no risk because we've already made our money off of suckers. People who combine their normal finances with bitcoin finances are dumb and deserve every penny they lose.

You see that's the problem. Bitcoin is supposed to be a currency. It's supposed to be useable as a means of storing finance.

All of those who invested in bitcoin, even at it's early stages, could have just as easily lost all that money. "No risk" is the exact opposite of the situation, it was high risk. Profit made was done so out of luck. That is the nature of risk. People make money from risky investments, but those people don't see the 10 other people who lost out by either coming in at the wrong time or hanging on too long.

It's essentially like gambling, by buying a bitcoin you are 'betting' they are going to go up. But the factors that control that are completely out of your control. Since the bitcoin has no underpinning, central reserve, regulation or monitory systems in palace there is really no way to predict it's trajectory. Nevermind that frequent attacks, selfish mining techniques and other vulnerabilities means things are stacked against you.

Some people will put their money on No. 7 black and win. It's still a stupid idea. But all of this does give me the urge to go to vegas. More fun than bitcoins. Probably a better long term investment plan too.

Vilealbaniandwarf:What the fuck are bitcoins actually backed by? Most currencies are backed by countries, I'm still wrapping my head around why Bitcoins are even worth anything at all. Not just another extension of the current dotcom bubble that's going to crash sometime reeeeeeeaaaalll soon.

It's not backed by anything other than the computer time used to process the transactions and the fact that people consider it to have value.

Most national currencies aren't any better. They just have their value based on the authority of the government issuing it. That's what Fiat Currency means. If the country gets conquered by another, the conqueror can declare the currency no longer valid.

Eh. An ideal capitalistic market involves the trade of goods and services which benefit society in some manner. There is risk and reward, yes, as not all ideas sort themselves out. But there is no ill will intended in such a model at its purest level. Making money is intended to be a positive side effect, while providing a product or service that your customers need, enjoy, and appreciate is the true "goal".

Creating economic bubbles based on items which have no intrinsic value whatsoever, while technically under the umbrella of 'capitalism", is certainly not using the intended spirit of capitalism as a concept, because it's less about "bettering society" and more about ripping people off.

Yes, I know, we don't live in an ideal society, and people do this sort of thing all the time. But this whole notion of people defending their actions of ripping people off as "just part of capitalism" always annoys me, because it's violating the spirit of the concept. Capitalism was never intended to be an easy way to scam people out of their hard earned money.

Eh. An ideal capitalistic market involves the trade of goods and services which benefit society in some manner. There is risk and reward, yes, as not all ideas sort themselves out. But there is no ill will intended in such a model at its purest level. Making money is intended to be a positive side effect, while providing a product or service that your customers need, enjoy, and appreciate is the true "goal".

Creating economic bubbles based on items which have no intrinsic value whatsoever, while technically under the umbrella of 'capitalism", is certainly not using the intended spirit of capitalism as a concept, because it's less about "bettering society" and more about ripping people off.

Yes, I know, we don't live in an ideal society, and people do this sort of thing all the time. But this whole notion of people defending their actions of ripping people off as "just part of capitalism" always annoys me, because it's violating the spirit of the concept. Capitalism was never intended to be an easy way to scam people out of their hard earned money.

Correction. You don't get rich by not lucking out on the risks you took, and I hear tissues might become a big market in UK.

Also, just to be a little cheeky. Just how much of a "risk" did you take, anyway? I mean, you speak with the firm tone of someone who was willing to put everything at stake to, how do you say, "improve himself"...but I highly doubt the stakes were anywhere near that high.

You say that, but lets see what you say when someone gives you a Liberty Dollar back as change. You have to be very careful when making Monopoly Money. You also have to be licensed to trade in it or you'll be violating Money Laundering laws. You also can't pay employees in Monopoly Money without following the rules very closely, or you'll run a foul of Labor Laws. As much as it isn't technically illegal to create a psudo currency, and the ethics of using monopoly money(economic term not game term see also Company Script) to create effective slaves a la Walmart in Mexico, creating it legally is tricky and may as well be illegal.

Ha! And people take this shit as money. If you have never invested in a Cryptocurrency you are a fucking idiot who deserves to lose every cent.

wait what? how does me not buying cryptocurrency makes me an idiot?

Vilealbaniandwarf:What the fuck are bitcoins actually backed by? Most currencies are backed by countries, I'm still wrapping my head around why Bitcoins are even worth anything at all. Not just another extension of the current dotcom bubble that's going to crash sometime reeeeeeeaaaalll soon.

Promises of exchange markets and belief in its value. Just like every other currency. Sure, governments have some actual property to back things behind, but it hardly ever comprises enough. Coutnries like mine where the central bank acutally has enough gold to cover 30% of my currency value are rare exceptions.

Why is bread worth anything? because you are willing to pay money for it. And to get money you are willing to work. so if we take out the middle man, you are ready to work for bread. and bitcoin is as much a middleman based on trust as us dollars.

JarinArenos:Instability and inherent silliness aside... doesn't bitcoin still cost significantly more to "mine" (in electricity costs) than the coin is, or ever has been, worth?

Yeah, those dirty commies, eh? While here, in the glorious West, we can use whichever currency we want! Dollars! Euros! Colorful rocks! Pearls!

Wait, what do you mean colorful rocks and pearls aren't legally recognized forms of payment in USA? I thought it was a free country!

More like dirty authoritarians, since in communism its actually communal rule, but thats not the topic here.

Yes, i can use colorful rocks and pearls provided the other person accepts it as a payment. now, since the other person lacks belief in thier value, he does not, meanwhile he does not lack belief in bitcoin. those that dont - wont let you pay with bitcoins. the same could be seen with fiat currencies when suddenly Belarus currency became worthless outside of the country once the other countries stopped trusting it and banks refused to trade it (it wasnt a political embargo mind you, banks decided to stop tradingo n thier own).

All payments that are not made in local currency is considered payments in nature or w/e the correct english word is, that means you pay with items. Money are also items just as much as pearls, however we as a nation agreed that it is easier if we have a signle dividable object we can use as a middleman. after all, i cant pay half a horse for your potatoes, but i can pay money for it and after two trades you can buy a horse from me for the same money.

Also, just to be a little cheeky. Just how much of a "risk" did you take, anyway? I mean, you speak with the firm tone of someone who was willing to put everything at stake to, how do you say, "improve himself"...but I highly doubt the stakes were anywhere near that high.

There's still plenty of time for things to happen, in any case.

Taking risks is not a all or nothing deal. I could have taken an extra 100 from my pay, invested into stocks (or bitcoins), earned 300 from it, took that 100 back and used the other 200 to invest further. at this point i have no chance of loosing anything other than my profit made from the investment, and as such my risk becomes minimal, yet i can still earn a lot of money if i invest visely (and get lucky).

And as long as it remains unstable i just cant see bitcoins as currency, but more like a investment.If i received a payment just before the price drop, i probably felt screwed.

So for easy online payment Pay-Pal wil do just fine for me.

you seem to be under wrong impression that maximum of regular money supply is stable. Its not. central banks change it all the time to their liking.

I'm well aware how banks work.But they are backed by national economy's, this does level the big spikes.

In the Euro zone, even when greece messed up big time, the Euro didn't freefall.

But my point is the value of you currecy doesn't vary that much if you stay within you countries borders.prices don't change in the shops if the Dollar drops in value compared to the Euro.And internatiol, a value drop of 40 to 50% is not likelySo espacaly on local markets, a real bank will do just fine.

off topic:I dont know the forum etiquettefor this.I find replying to a post with so many quotes a bit of a bother.

Also, just about everyone I know who has invested into bitcoins have made back twice their investment and are now trading with money completely separate from their original investment. Their original investment is back in their pocket.

They key to your faulty logic is it is only everyone "you" know.

For example,Lets say person A invests 50 of their 100 to buy from Person CSome time passes and it doubles in "value"Then person B invests 100 of their 100 to buy person A's BitcoinPerson A has 150 and person B has 0 and person C has 50

The problem should be obvious that there is no combination where every player "doubles" their original investment. It is simply a game of hot potato.

There is an economic scenarios were it will appear that everyone is making money, but what's happening is early investors are simply profiting off the later investors. In that case it is ether a Pyramid Scheme, Ponzi scheme, or Tulip Bulb Mania. All of those collapse right when the amount of suckers entering the market no longer meet or exceed the scammers leaving the market.

Now you might think that it's just a bubble like in the Housing Market, or Stock Market, but you'd be wrong. In the case of a Market bubble it's similar to Tulip Mania, but with the difference that there is actual value, but it's just been over valued 2 or 3 times. A house still is a home, and supplies shelter, and that Value is retained even if the market isn't estimating it rationally. A tulip bulb that is being sold for 1000% times it's actual value is worthless when it collapses. There is no way a single tulip bulb is ever worth the value of land or of a home, but under a Mania it will be traded as such. Up until the big crash happens when every suckers money is in the market. Even people who got out early suffered when the Tulip Mania crashed so saying that the people "you" know are fine could just be naivety. It's never a good thing when you got money out of a scam but your friends and family got caught with the potato because "you" encouraged them to invest.

So what is the "value" of a bitcoin. You might want to say it's the electricity used to create and maintain it. However, that's its cost not its value. Its value is actually Zero. You might say, but the USD has the same issue. Incorrect, the value of the US Dollar is only Zero to Ron Paul Libertarians who want to destroy the US Government. The Value of the US Dollar is the Value of the Land the US is on, the value of its citizens, the value of its homes, the value of its resources, and, arguably its most important asset, its military might. BitCoin has none of those things, and never will. If it gets in trouble there is no central authority to respond. Bitcoiners can just "leave" it, but renouncing your Citizenship is actually very complicated, and doing so means you will probably have to leave since defecting is one of the few ways to do it unless its to resolve an issue with duel citizenship. There is far more stable value in the USD then there ever will be in BTC.

I'm well aware how banks work.But they are backed by national economy's, this does level the big spikes.

In the Euro zone, even when greece messed up big time, the Euro didn't freefall.

But my point is the value of you currecy doesn't vary that much if you stay within you countries borders.prices don't change in the shops if the Dollar drops in value compared to the Euro.And internatiol, a value drop of 40 to 50% is not likelySo espacaly on local markets, a real bank will do just fine.

off topic:I dont know the forum etiquettefor this.I find replying to a post with so many quotes a bit of a bother.

Yes, it does, level some spikes, however as in the case of the recent crysis economy spikes exist as well and still technically central bank can do whatever it wants with limiting the supply of money. obviously, it usually chooses to act wisely, because stable economy are beneficial to it, but that does not mean we got a hardcap on our currency that cant just be lifted.Greece messing up didnt make Euro freefall (though it did dipped quite hard in the market) because Euro is not used by Greece only. Had it been used by Greece only it would have felt. There are recent examples of this, the 2000 Iceland national defaulting or the freefall of Belarus rubles during the economical collapse recently. Euro has the benefit of multiple nations, which means that if one nation falls others can carry the weight till it gets back on the feet, this is why it is very hard to kill Euro as a currency.

Yes, the market value does nto drop as rapidly as bitcoins. However if you know your history - it used to back when currencies first introduced. Bitcoin is barely few years old. When my countries currency was introduced after the fall os soviet union we had up to 100% inflation for a few years and it took over 10 years to stabilise. similar can be sid about many other currencies, so bitcoins may stabilize in time as well unless speculators blow it to kingdom come (and i know they are causing a bubble now already)

As for many quotes, i realize it is not easy thing to read though and i am sorry, but i find it to be the better option than double or triple posting. Moderators have not complained about it as far as im aware nor could i find a limit of quotes in the rules.